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Corporate Tax Rate
Companies with paid-up ordinary share capital of not more than RM2.5 million are taxed at 17% on the chargeable income of the first RM600,000, with the excess being taxed at 24%.
Tax Year
Tax is assessed on a calendar year basis. However, accounting period ending on a date other than 31 December is acceptable.
Basis of Taxation
Resident and non-residents are taxed only on income derived from sources in Malaysia.
Tax Treatment of Unutilized Tax Losses
Any unabsorbed tax losses in a year of assessment may be carried forward to offset against future income, up to seven (7) consecutive years, provided the shareholding test is met.
Tax Treatment of Dividends Received from Domestic Shareholdings
Exempted.
Tax Treatment of Dividends Received from Foreign Subsidiaries or Associated Companies
Exempted.
Group Tax Relief
Group relief is allowed up to 70% of the current year adjusted loss of the surrendering company and is available only for the first three (3) years of operations, subject to fulfillment of other conditions.
Controlled Foreign Corporation (CFC) Rules
None.
Earning Stripping Rules
Interest expenses on financing arrangement between controlled entities, if exceeding RM500,000 in a year, are restricted to a maximum of 20% of the Tax-EBITDA allowed for deduction against the business income for the relevant year. The interest restricted in a year is allowed to be carried forward for deduction against future income.
Tax Filing Deadlines
Tax returns have to be filed annually within seven (7) months from the last day of a company’s financial year.
The following are domestic withholding tax rates on payments made to non-resident companies. The rates may be reduced according to Malaysia’s tax treaties with other countries.
Interest
15%.
Service Fees
10%.
Dividends
None.
Rental of Moveable Properties
10%.
Royalties
10%.
Tax Treatment of Capital Gains Arising from the Disposal of Domestic Shareholdings
Capital gains are not subject to tax. However, gains on the disposal of shareholdings may be subject to income tax if the shares were acquired for disposal, as part of a share dealing business, or profit-making undertaking.
There is a separate real property gains tax on the gains from the disposal of shares in real property companies that range from 10% to 30% depending on the holding period and tax residency.
Tax Treatment of Capital Gains Arising from the Disposal of Foreign Shareholdings
No capital gains tax on disposal of shares.
Deductibility of Capital Losses Resulting from the Disposal of Domestic and Foreign Shareholdings
Capital losses are not deductible.
